Price and Output Response of Marketed Surplus of Foodgrains: A Cross‐Sectional Study of Some North Indian Villages

If foodgrains producers are also the major consumers, price elasticity of production and price elasticity of marketed surplus should be distinguished. While the former is likely to be positive, the latter may theoretically assume either sign, and this introduces a complication in deriving the long‐run price elasticity of marketed surplus. Village‐level, cross‐sectional data are used to get a direct regression estimate of the short‐run price elasticity of marketed surplus for northwest India. The estimate seems to indicate negative elasticity. Other variables with statistically significant influence on marketed surplus are production level of foodgrains and income from milk.